On Friday, stocks had a big rally, with the S&P 500 rising by around 2.4%. But the rally looks shaky at best, and with Jay Powell due to speak on Tuesday afternoon at a Wall Street Journal event, there is a good chance that the gains from Friday vanish. 

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The entire rally was built on a very unstable pattern which we have seen numerous times over the last several months. It is one with a big vertical push higher. Typically, these patterns have reverted to the origin in the days that follow, suggesting the gap at 3,930 on the SPX gets filled and the potential to fall back to 3,860.

Powell speaking on Tuesday creates this opportunity for the pullback at the beginning of the week, as traders are likely to start buying puts to hedge the risk of what Powell may say. However, given that the market has fallen six weeks in a row, and it is an options expiration week, making for a good chance that an early week pullback gets reversed by week’s end, with the index moving back to 4,055. However, if resistance at 4,055 is broken, the chance exists for a push to 4,120.

But ultimately, this week will be range-bound with a sideways chop.

The market’s overall health seems to be very weak and in a state of deterioration, which means that the bear market rally won’t last. The cumulative new highs-new lows on the Nasdaq make new lows after new low and shows no sign of stabilization. Typically, when the Nasdaq composite is near a bottom, there is a sign of the new highs minus new lows slowing or flattening, which is not even close yet.

Shopify (SHOP)

Stocks like Shopify had big moves on Thursday and Friday, but every time the stock has gotten back to its 10-day exponential moving average, it has failed to push any higher, with that being the case since it first started to fall back in December. The RSI continues to consolidate, but at this point, it is not clear that the bottom is in, but the downside is starting to look very limited.

General Electric (GE)

GE has a very weak chart, with a big gap to fill down to $64.

Gold (GOLD)

Gold appears to be very close to breaking an uptrend, and if that uptrend fails, a drop to $1,675 seems possible.

Intel (INTC)

Intel keeps messing around with support around $43 and lives in a hazardous region. I think a break of support can send the shares sharply lower into the upper 30s.

JPMorgan (JPM)

JPMorgan appears to be getting ready for a more considerable drop. I think that will lead the stock to the shares falling to the big gap at $104 over the next few weeks.

I will leave it there more this week.

-Mike